“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves… When a bank makes a loan to one of its customers it simply credits the customer’s account with a higher deposit balance. At that instant, new money is created…”
the relationship between reserves and loans typically operates in the reverse way to that described in some economics textbooks. Banks first decide how much to lend depending on the profitable lending opportunities available to them…It is these lending decisions that determine how many bank deposits are created by the banking system. The amount of bank deposits in turn influences how much central bank money banks want to hold in reserve (to meet withdrawals by the public, make payments to other banks, or meet regulatory liquidity requirements), which is then, in normal times, supplied on demand by the Bank of England
These should be two of the easiest questions to answer in economics; after all, money is the one thing that we all use in an economy—surely we know what it is, and where it comes from? Click here to read the rest of this post.
Michael Hudson says Greece’s Finance Minister Varoufakis is proposing austerity on the banking class rather than on the working class to balance the budget. SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network.
(Commentary posted by Roger Erickson) Battle Over Banking: A Public Bank for the Republic of Vermont (1803) The first part is is a fascinating historical story, for multiple reasons. First, for the mere fact that a savvy set of state...
Irish-Style Banking Inquiry into the 2008 Financial Crisis NEP’s Bill Black on The Real News Network discussing his recent testimony in Ireland for a banking inquiry and the challenges the country faces in acknowledging its financial crisis.
Tweet Sign the petition! Tell the future Prime Minister of the UK that money creation should only be used in the public interest. We need to know your name. Please check your email is valid. not in the UK?
Sorry, I’ve been very busy in recent weeks, finishing up a book on Minsky and revising my Modern Money Primer for a second edition (more on both of those projects later). Meanwhile, Lola Books is gearing up to release the Primer in Spanish next week.
On February 23, 2015, Tyler Durden writes on Zero Hedge: If anyone has stopped to ask just why global central banks are in such a rush to create inflation (but only controlled inflation, not runaway hyperinflation… of course when they fail with the...
The Millennials’ Money Pt. 1 By J.D. Alt The ebook Diagrams & Dollars has been a top-seller on Amazon (in the category “macroeconomics”) for over a year now. There have been many requests for a paper-back version.
Iceland’s Supreme Court Upholds Jail Sentences of Four Banking Executives Edition of the Bill Black Report at The Real News discussing the good news that Iceland’s Supreme Court upheld the jail sentences that were handed down to four banking...
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